Under the PRC Patent Law, the offering for sale of an infringing product constitutes an act of infringement, regardless of whether the product is actually sold or not. However, there are divergent views as to what damages arise merely from such offering (without any actual sale).
According to one school of thought, the patentee does not suffer any loss of business and therefore the infringer shall only be liable to pay the costs incurred for the enforcement. An opposite argument is that the existence of a direct competitor breaks the monopoly contemplated under the patent system, and so inherently impacts the business of the patentee.
Recently, the Supreme People’s Court had a chance to rule on this issue in a decision concerning a patented concrete mixing pump. In that case, the defendant had listed infringing concrete pumps on its own website and on an e-commerce platform, but there was no evidence of any actual sales having taken place.
The SPC found that an unauthorized offer for sale unavoidably lead to price erosion of the proprietary product. Further, as consumers may want to consider and compare competing goods, the patentee’s sales may be hampered and delayed. The Court also viewed that the defendant’s offering of the goods may have an adverse influence on the effectiveness of the patentee’s own advertising and marketing campaigns. The Court went on to emphasize that imposing a damages liability in such circumstances would be in line with the spirit of the Patent Law to promote innovation and deter infringement.
As to the determination of the actual damage amount, in view of the difficulties in assessing the hypothetical loss, the Court held that the statutory compensation bands (which under current legislation can be between RMB30k to 5million, approximately US$5k to 780k) may be awarded. Though in this case, contrary to the Court’s stated emphasis for protecting intellectual property, the patentee only received RMB30k in damages, a fraction of the asking price (RMB187k) of a single infringing pump.
Since the PRC Court has wide discretion when setting the damages in an “offer for sale” situation, it is still best for the patentee to obtain evidence of actual sales of the product by the defendant, and as necessary petition the Court to order the defendant to disclose its internal sales records.
